She was waiting for her turn to pay the medical bills and get her brother discharged from the hospital. But, she almost fainted when she saw the bill amount. It was way more than what she had expected.
She was confident that her brother's health insurance plan would be sufficient to cover most of the medical expenses and only a minimal amount (mainly deductibles) would have to be paid from out of pocket. What she did not take into consideration was the rising cost of health care and other medical procedures, which greatly affected the final bill amount.
Finding no other way, she paid all the bills and filed the health insurance claim for getting just a small fraction of it as reimbursement.
She and her brother did not realize that the Sum Insured (SI) opted by them with their health insurance policy might not be sufficient and thus had to pay hefty medical bills despite having a health insurance policy. This situation could have been avoided, if they had purchased more than one health insurance policy, so that the other policy would have covered them for the charges after their SI from the first policy exhausted and helped them reduce their out of pocket expenses.
What is coinsurance?
The concept, of sharing your hospital expenses between two health insurance companies is called coinsurance. You select this coinsurance when you buy/renew your health insurance policy.
For ex. if you have Bajaj Allianz's individual health insurance plan, you can purchase another health insurance policy from company B, which can take away your financial burden once the SI of your individual health insurance policy expires.
How does coinsurance help me?
By purchasing multiple health insurance policies, you can pay lower premium amounts and enhance your health insurance coverage instead of investing a large amount in a single health insurance policy for limited coverage.
Having coinsurance, i.e. investing in multiple health insurance policies, will help you in case when one of your company rejects your claim but some other company accepts it, depending upon the terms and conditions mentioned in your policy document. Thus, rejection of your claim from one insurance plan will not financially burden you, as the medical expenses incurred, can be taken care of by another policy.
How does coinsurance work?
If you have multiple health insurance policies, then all of them can reimburse you the amount of the treatment based on the coinsurance selected by you. You will not be reimbursed the complete claim amount multiple times, but the claim amount will be divided amongst the health insurance companies/policies and you will get the reimbursement accordingly.This can be availed using the cashless health insurance facility as well.
Let's learn the concept of coinsurance with the help of an example.
If the coinsurance selected by you is 70% and 30% between two insurance companies/policies A and B, then a health insurance claim of INR 1 lakh will be shared by the companies/policies in the same ratio (i.e. Company/policy A will pay INR 70,000 and company/policy B will pay INR 30,000).
One thing that you should remember is that both of your insurance companies/policies will not be paying you the entire claim amount. It will always be decided on the basis of coinsurance. Also, deductibles of both the policies will have to be paid by you and the remaining claim amount will be shared by your health insurance policies. It is important to understand benefits of health insurance policies such as coinsurance, tax deductions under sec 80D to make the most of your policy.